China imposes five more years of countervailing duties on US broiler chickens, continuing the China-US trade dispute

The China-US trade "chicken war" will last at least another 5 years.

On August 22, China's Ministry of Commerce issued an announcement stating that it would continue to impose countervailing duties on imported white-feathered broiler chickens originating in the United States for 5 years, "if the countervailing measures are terminated, the damage caused to China's domestic industry may continue or recur."

According to the ruling, China's countervailing duty rates on different US companies range from 4% to 4.2%, and will take effect from August 30.

This is the latest step in the nearly 7-year-long China-US "broiler chicken dispute."

As early as August 29, 2010, the Ministry of Commerce issued an announcement stating that it would impose countervailing and anti-dumping measures on white-feathered broiler chickens imported from the United States, with a term of 5 years. The United States subsequently filed a complaint with the WTO, requesting consultations in this case under the WTO dispute settlement mechanism.

In September 2013, the WTO published the panel report on the China-US white-feathered broiler chicken dispute. China then conducted a re-investigation of the case and adjusted the countervailing and anti-dumping duty rates in July 2014.

However, the dispute between the two sides did not end there. In June of last year, that is, two months before the 5-year term of the dual anti-dumping and countervailing measures was about to expire, the Ministry of Commerce received an application from the China Animal Agriculture Association, on behalf of the domestic white-feathered broiler chicken industry, for a sunset review of the countervailing and anti-dumping measures, arguing that if the countervailing and anti-dumping measures were terminated, the damage to the domestic industry might recur, and requesting that the Ministry of Commerce rule to maintain the original measures.

In August and October 2015, the Ministry of Commerce respectively initiated sunset review investigations into the countervailing and anti-dumping measures on white-feathered broiler chickens. The continued imposition of countervailing duties announced this time is the final ruling of the sunset review from last August.

At the same time, the United States was not idle either.

In May of this year, the United States again filed a complaint with the WTO over this action, arguing that it failed to comply with WTO rules and put US farmers at a disadvantaged position in competition.

According to data published by the US Department of Agriculture, in 2014 the United States exported 260 million pounds of chicken, turkey and eggs to China, while in 2009, before China imposed "dual anti-dumping and countervailing" measures on relevant US companies, that figure was 729 million pounds.

One thing is clear: the "chicken war" between China and the United States will continue in the short term, because the results of China's anti-dumping sunset review have not yet been announced. Once China continues to impose dual anti-dumping and countervailing duties on US broiler chickens, the United States will obviously come up with "countermeasures" again.

"White-feathered broiler chickens" are just one microcosm of the current China-US trade friction.

On July 13 of this year, the Office of the United States Trade Representative (USTR) issued a statement saying that China's export tariffs on 9 raw materials, including graphite and copper, violated relevant WTO rules, and the United States would file a complaint with the WTO. This was the 13th time during US President Obama's tenure that the United States had brought a case against China at the WTO. A week later, the USTR expanded the scope of the complaint to 10 raw materials, as well as export quotas for 5 raw materials.

Frequent trade friction is certainly due in part to the US election factor, but on the other hand it is still because Obama hopes to get Congress to pass the Trans-Pacific Partnership (TPP) during his tenure, since the presidential candidates of both US parties currently hold negative attitudes toward the TPP.

The Wall Street Journal pointed out that if the TPP is ultimately not approved, it will setback US policy in Asia. US Trade Representative Froman said that either the United States strengthens its leadership position in the region, or it yields this right to China, and a single vote can decide this issue.

The report said that if the TPP collapses, Asian leaders who spent political capital supporting the TPP will be less likely to support it again. Smaller countries balancing relations between China and the United States may become suspicious of the United States and become more accommodating to China.